The Critical Medicines Act’s Impact on Pharmaceutical Manufacturing and Supply Resilience in Europe

On 12 May 2026, the European Commission (EC) welcomed the landmark policy agreement on the Critical Medicines Act (CMA).1 The proposed EC CMA is one of the most significant industrial policy measures in the European pharmaceutical sector in recent decades. Launched in March 2025 as part of the larger European Health Union initiative, the CMA seeks to improve the availability, manufacturing, and supply security of essential medicines throughout the European Union (see Figure).2 The initiative was launched in reaction to ongoing medicine shortages, geopolitical unrest, and insights gained from the COVID-19 pandemic, highlighting Europe’s reliance on external providers for APIs and essential medicines.3-5

The CMA significantly shifts the strategic focus of pharmaceutical manufacturing in Europe. Traditionally, procurement processes in many European Union countries emphasized low costs, often favouring large-scale offshore production in Asia, especially in China and India.4 The new framework emphasizes supply security, resilience, diversification, and regional manufacturing capacity. During the next 5-10 years, this policy shift is likely to impact pharmaceutical development strategies, manufacturing sites, procurement approaches, and investment decisions throughout the European life sciences sector.

From Cost Efficiency to Supply Resilience

A key transformation in the CMA is shifting from procurement systems focused mainly on price competition. The CMA now includes resilience-related criteria, enabling EU governments to prioritize suppliers that have diversified and secured manufacturing networks, contingency capacity, and production within Europe.3 This change is likely to impact pharmaceutical economics throughout Europe. Manufacturers that once relied on highly centralized production outside Europe might now experience strategic pressure to regionalize parts of their manufacturing processes. Companies producing antibiotics, sterile injectables, insulin, vaccines, and other essential medicines may need to invest more in European API synthesis, fill-finish processes, and packaging to stay competitive in EU tenders.4

The policy also promotes “strategic projects” that benefit from expedited regulatory processes, simplified access to financing, and possible state aid.7 These incentives could greatly reduce obstacles for manufacturers aiming to set up domestic or regional production in Europe. In practical terms, this suggests that the pharmaceutical sector might favour more modular manufacturing approaches instead of depending on a few large global production centres.8

Implications for Decentralized and Distributed Manufacturing

The CMA might significantly accelerate investment in decentralized or distributed pharmaceutical manufacturing systems. Traditionally, pharmaceutical production has favoured very large central facilities to maximize economies of scale. Yet these plants are susceptible to supply disruptions, transport delays, trade conflicts, pandemics, and regional political instability. Distributed manufacturing offers an alternative, with smaller, modular facilities located closer to demand centres. These facilities can quickly adjust production levels and switch products during emergencies. Within the CMA framework, this flexibility is strategically important because resilience delivers economic and regulatory benefits.

According to Carol Houts, CEO, Germfree, Belgium/US, “The CMA signals a shift in how Europe thinks about pharmaceutical manufacturing. In the past, strategies have predominantly focused on cost optimization, global sourcing, and consolidated supply chains. The CMA is really moving towards resilience, regional capacity, supply security, and the ability to respond when global systems are disrupted.”

Advanced continuous manufacturing technologies are especially important here.9 They reduce plant size, lower inventory needs, and enable flexible production scaling. Unlike traditional batch methods, modular continuous systems can usually be set up more quickly and duplicated across different sites.10 In the coming decade, Europe is likely to see heightened investment in modular API production facilities, portable fill-finish systems, and hybrid digital manufacturing networks. This trend corresponds with wider European industrial policy aims centred on “strategic autonomy.”11 Policymakers are increasingly concerned that over 80% of certain antibiotic APIs used in Europe are sourced from Asia.5 A manufacturing network spread across multiple locations can help reduce risks linked to export bans, shipping delays, or regional emergencies.

Modular Manufacturing and Rapid Deployment Capacity

The CMA’s focus on preparedness and supply continuity highlights the potential benefits of modular and quickly deployable manufacturing facilities. Modular manufacturing uses prefabricated units that can be installed, expanded, or relocated more quickly than conventional pharmaceutical plants. These systems could be particularly useful during health emergencies or supply shortages. Modular manufacturing platforms are currently under consideration for vaccines, sterile injectables, biologics, and advanced therapy medicinal products (ATMPs). Looking ahead, the CMA might encourage public-private partnerships to invest in additional manufacturing infrastructure spread across multiple EU member states.12 These facilities could operate at reduced capacity during regular times but quickly ramp up production in emergencies.

Digitalization will play a key role in this transformation. Technologies such as automation, process analytical technologies (PAT), and AI-driven quality monitoring can help smaller facilities achieve regulatory compliance similar to large centralized plants.13 This approach may lower operational risks and support distributed production across different locations. The advantages go beyond just resilience. Decentralized manufacturing has the potential to shorten lead times, cut transportation emissions, and enhance medicine availability in smaller or underserved European markets. Nevertheless, implementing these systems will require significant harmonization of regulatory oversight, workforce training, cybersecurity infrastructure, and quality assurance frameworks across EU Member States.

Collaborative Manufacturing Ecosystems

The CMA also encourages collaborative procurement and cross-border cooperation among member states.3 This collaborative approach could expand into manufacturing ecosystems that include pharmaceutical firms, contract development and manufacturing organizations (CDMOs), hospital networks, academic institutions, and regional health systems. These collaborative approaches could be particularly vital for advanced therapies, personalized medicines, and niche critical drugs, where production volumes are low but clinical need is urgent. Regional manufacturing clusters might integrate local production with shared logistics, digital infrastructure, and clinical services.

“Over the next 5 to 10 years, we'll see a shift as European manufacturers and health systems start to work more collaboratively, geographically,” Houts agrees. “Global supply chain issues are not necessarily confined to a single region, and challenges may differ across regions worldwide. It's going to require strong support from countries and initiatives to bring these manufacturing capabilities to fruition, particularly in APIs. APIs are quite inexpensive to produce at scale in places like India and China, but reproducing them in Europe or the United States is extremely expensive.”

For instance, collaborations between pharmaceutical companies and hospital-based manufacturing centres can facilitate decentralized production of cell and gene therapies. Because these treatments typically have very short shelf lives and require highly personalized manufacturing, producing them closer to patients could help minimize transport delays and maintain product quality. The CMA may promote the creation of resilient manufacturing ecosystems instead of standalone production facilities.14 In this approach, pharmaceutical resilience relies not just on physical plants but also on collaborative networks that can quickly coordinate supply, demand forecasting, and emergency response.

Implications for Advanced Therapies and Point-of-Care Production

Over the next decade, the CMA could serve as a key driver for advanced manufacturing technologies and point-of-care pharmaceutical production. Cell and gene therapies are already challenging traditional centralized manufacturing models, as they are often patient-specific, time-sensitive, and logistically complex. Point-of-care manufacturing refers to the creation of therapies directly within or near hospitals and treatment centres. The CMA’s focus on regional resilience and localized production could naturally support this growing approach. Europe might increasingly invest in small, automated manufacturing systems designed to produce autologous cell therapies near the patient’s bedside.

Similarly, modular manufacturing systems for small molecules could evolve providing mini factories, in which highly automated facilities generate essential medicines on demand at regional levels.15 These systems might heavily depend on continuous flow chemistry, robotics, and digital quality management. Regulatory frameworks will need to adapt accordingly. The European Medicines Agency is already emphasising manufacturing resilience and digital innovation.16

Upcoming European regulations might become more flexible, supporting decentralized manufacturing validation, remote monitoring, and real-time release testing. Importantly, the CMA does not suggest Europe achieve total pharmaceutical self-sufficiency. International collaborations continue to be a component of the strategy.2 Nonetheless, there is a notable move towards diversification and less reliance on single external suppliers.

The Future

The CMA represents a significant strategic change in European pharmaceutical policy. Instead of seeing medicines merely as market commodities, the EU now considers them vital public health resources that need a robust regional infrastructure. In the coming 5-10 years, this transition is expected to boost investments in European manufacturing capacity, decentralized production systems, modular facilities, and collaborative pharmaceutical networks.

“I think that distributed manufacturing, whether through regional manufacturing hubs or point-of-care, is going to be necessary to address both drug shortages and expand access,” says Houts.

For pharmaceutical manufacturers, the CMA could fundamentally reshape the basis of competitive advantage. Factors such as supply resilience, geographic diversification, digital manufacturing capabilities, and regional integration might become as vital as manufacturing cost efficiency. Companies that integrate advanced manufacturing technologies with flexible regional supply networks are likely to gain a competitive edge in the evolving European regulatory and procurement landscape. At the same time, the CMA could accelerate the adoption of modular manufacturing, continuous processing, and point-of-care production technologies, particularly for advanced therapies and essential medicines. If implemented effectively, the CMA could position Europe as a global leader in resilient pharmaceutical manufacturing, enhancing long-term medicine security for European patients.

References

1. EMA. EMA welcomes political agreement on the Critical Medicines Act. News release. ec.europa.eu. 12 May 2026. https://ec.europa.eu/commission/presscorner/detail/en/ip_26_1017
2. EC. Proposal for a Critical Medicine Act. ec.europa.eu. 11 March 2025. https://health.ec.europa.eu/publications/proposal-critical-medicines-act_en
3. Council of the European Union. Critical Medicines Act: Council agrees its position on new rules to tackle shortages. ec.europa.eu. 2 December 2025. https://www.consilium.europa.eu/en/press/press-releases/2025/12/02/critical-medicines-act-council-agrees-its-position-on-new-rules-to-tackle-shortages/pdf
4. Council of the European Union. Critical Medicines Act: Council and Parliament reach provisional deal. ec.europa.eu. 12 May 2026. https://www.consilium.europa.eu/en/press/press-releases/2026/05/12/critical-medicines-act-council-and-parliament-reach-provisional-deal/pdf
5. Reuters. EU announces plans to cut reliance on Asia for antibiotics and critical drugs. 11 March 2025. https://www.reuters.com/business/healthcare-pharmaceuticals/eu-announces-plans-cut-reliance-asia-antibiotics-other-critical-drugs-2025-03-11
6. EC. Critical Medicines Act - Public Health. ec.europa.eu. Accessed 25 May 2026. https://health.ec.europa.eu/medicinal-products/critical-medicines-act_en
7. Reuters. EU agrees draft deal to tackle essential medicine shortages. May 12, 2026. https://www.reuters.com/sustainability/boards-policy-regulation/eu-reaches-provisional-deal-address-shortage-essential-medicines-2026-05-12
8. Schwörer T., et al. Modular and reconfigurable factories for continuous production innovation in pharmaceutical manufacturing.International J. Prod. Res. 2026; 64(6), 2210–2232. https://doi.org/10.1080/00207543.2025.2575844
9. Nasr M.M., et al. Regulatory perspectives on continuous pharmaceutical manufacturing. J Pharm Sci. 2017;106(11):3194-3200. https://doi.org/10.1016/j.xphs.2017.06.015
10. Schaber S.D., et al. Economic analysis of integrated continuous and batch pharmaceutical manufacturing: a case study.Ind Eng Chem Res. 2011;50(17):10083-10092. https://www.research.ed.ac.uk/en/publications/economic-analysis-of-integrated-continuous-and-batch-pharmaceutic/
11. EESC. Future of pharmaceutical industry in Europe: Addressing strategic autonomy, API production, affordable medicines and unmet needs. Accessed 25 May 2026. https://www.eesc.europa.eu/en/our-work/opinions-information-reports/opinions/future-pharmaceutical-industry-europe-addressing-strategic-autonomy-api-production-affordable-medicines-and-unmet-needs/related-links-ccmi-212
12. Gov.UK. New CMA proposals to drive growth, investment and business confidence. Competition and Markets Authority. Blog. 13 February 2025. https://competitionandmarkets.blog.gov.uk/2025/02/13/new-cma-proposals-to-drive-growth-investment-and-business-confidence/
13. Allison G, et al. Regulatory and quality considerations for continuous manufacturing. J Pharm Sci. 2015;104(3):803-812. https://doi.org/10.1002/jps.24324
14. The Industrial Forum. Advanced Manufacturing at the heart of a resilient, sustainable and competitive Europe. Recommendations by the EU Industrial Forum. 12 June 2023. tf5-report-final-version--12.06.2023-3.pdf
15. Sanofi. Modulus: Redefining Biopharma Manufacturing. 8 October 2025. Accessed 25 May 2026. https://www.sanofi.com/en/magazine/ai-in-healthcare/modulus-redefining-the-future-of-biopharma-manufacturing
16. EESC. Critical Medicines Act Opinion. 18 June 2025. Accessed 25 May 2026. https://www.eesc.europa.eu/en/our-work/opinions-information-reports/opinions/critical-medicines-act

About the Author

Cheryl Barton, PhD, is founder and director of PharmaVision, Pharmavision.co.uk.